The government has extended the tax holiday for eligible startups by five years, allowing new businesses incorporated until April 1, 2030, to avail of tax deductions under Section 80-IAC of the Income-tax Act. This amendment, which takes effect from April 1, 2025, aims to provide continued fiscal support to startups and boost entrepreneurship in India.
The existing provisions under Section 80-IAC allow eligible startups to claim a 100% deduction on profits for three consecutive assessment years within the first ten years of incorporation. To qualify, startups must meet the following conditions:
- The business turnover should not exceed Rs 100 crore.
- The startup must hold a certificate of eligible business from the Inter-Ministerial Board of Certification.
- It must have been incorporated between April 1, 2016, and March 31, 2025.
- With the latest amendment, the incorporation deadline for availing this benefit has been extended by five years, up to March 31, 2030.
The impact
This extension aligns with the government’s focus on fostering innovation and supporting early-stage businesses. By providing a longer window for tax incentives, the move is expected to encourage more entrepreneurs to enter the market, particularly in sectors with high growth potential.
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Additionally, the decision comes amid growing efforts to make India a global startup hub, ensuring that financial constraints do not hinder business growth.
